How Team USA Athletes Can Protect Their Medals from Taxes

For athletes representing Team USA, winning a medal on the world stage is the culmination of years of hard work and dedication. However, while the glory of standing atop the podium is priceless, the IRS views the value of the medals and any accompanying prize money as taxable income. This can lead to a significant tax burden, turning the dream of Olympic or Paralympic success into a financial headache. Heres how Team USA athletes can protect their medals from taxes:

Understanding the Tax Implications

Before diving into strategies for minimizing tax liabilities, it's essential to understand why and how these taxes are imposed.

• The IRS considers the value of the medals and any prize money awarded to athletes as taxable income under federal law.
• Depending on the athlete's total income, this additional income could push them into a higher tax bracket.

Strategies to Protect Medals from Taxes

Several strategies can help Team USA athletes minimize or defer their tax obligations, ensuring they get to keep more of their hard-earned rewards:

1. Utilize the Exemption for Olympic and Paralympic Medals and Awards

• In 2016, the United States Congress passed the United States Appreciation for Olympians and Paralympians Act. Under this act, the value of medals and prize money is exempt from federal taxes for athletes earning below a certain threshold.
• The exemption applies only to athletes with an adjusted gross income (AGI) of $1 million or less ($500,000 for single filers).

2. Professional Guidance

• Team Up with a Tax Professional: Consulting with a tax advisor who specializes in sports and entertainment income can provide customized strategies to minimize tax liabilities.
• Stay Informed: Tax laws frequently change, and what might be beneficial in one tax year might not be the next. Keeping abreast of new tax provisions is essential for efficient tax planning.

3. Leveraging Deductions and Credits

• Training Expenses: Specialized coaching, equipment, travel for competitions, and other related expenses can often be itemized as deductions.
• Sponsorship Deals and Endorsements: While these may increase taxable income, the associated business expenses might be deductible.

4. Long-Term Planning

• Retirement Savings Plans: Contributing to an IRA or 401(k) can help defer taxes on income earned from medals and endorsements.
• Investing in Annuities: Annuities allow athletes to receive periodic payments, spreading the incomeand the tax burdenover several years.

5. State-Specific Exemptions

• Some states have their own exemptions or credits for Olympic and Paralympic athletes.
• Research Your States Policies: States differ in how they handle the taxation of income from medals and prize money. Its crucial to understand the specific laws in your home state.

Professional Tax Planning

Implementing these strategies requires careful planning and professional guidance. Not only do athletes need to navigate the complexities of federal and state tax laws, but they also need to consider the long-term financial implications of their earnings.

To assist in this process, its essential to work with a tax professional who understands the unique challenges faced by elite athletes. Our team offers tailored solutions to help you protect your earnings and ensure you can keep more of what youve worked so hard to achieve.

For more information and to schedule a consultation with our specialists, click here.

By implementing the right strategies, Team USA athletes can enjoy the fruits of their labor without the added burden of excessive taxes. Dont let taxes tarnish your golden momentstake proactive steps to protect your financial future today.